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In one of its first acts, the UK’s newly formed Conservative government has introduced legislation to update travel industry regulations to address digital’s impact on consumer buying behavior.
This week’s proposed update to the UK’s Air Travel Organizers’ Licensing (ATOL) bill would further modernize a 1970s-era financial protection plan created to aid consumers who have purchased travel packages that include flights.
Under ATOL, every UK travel company that sells travel packages including a flight is required to hold an ATOL license. If an ATOL-licensed firm goes out of business before a purchased trip, the UK’s Civil Aviation Authority will refund consumers or, if they are already on a trip, ensure their repatriation home. The plan is funded by contributions from travel companies.
According to a government briefing paper on the bill, in the five years since ATOL’s last update, there have been “significant changes in the travel market with the emergence of new digital business models and changes in consumer purchasing behavior,” with consumers using the internet to “mix and match” or “dynamically package” the components of their trip in a way that often falls outside the scope of ATOL.
As in most markets, the UK has seen digital travel purchasing soar. eMarketer estimates that digital spending on leisure and unmanaged business travel will top £35 billion ($47 billion) by the end of this year—up more than 7% from 2016—and will pass £40 billion ($54 billion) in 2020.
Widening use of digital travel tools is helping to drive those spending gains. eMarketer’s latest forecast of UK digital travel activity predicts 61.7% of the country’s internet users ages 18 and older will book travel via the internet at least once this year.
If passed, the revised ATOL bill would provide the same consumer protections to digital buyers of flight-inclusive travel packages as those already enjoyed by purchasers using nondigital means—thus extending ATOL protection to a broader range of buyers.
ATOL-covered travel had dwindled rapidly as digital travel buying became mainstream in the UK. According to UK government statistics, over 90% of UK leisure flights were ATOL-qualified in 1998, but that figure had fallen to just under 50% by 2009—the last year for which it provides data.
The bill also ensures that ATOL’s provisions comply with the EU Package Travel Directive scheduled to go into effect in 2018.
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